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Graduate School of Technology Management Vaccine Manufacture in South Africa: Policy Failures of the Past Should Inform Our Options for a Healthier Future

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Abstract

COVID-19 has reignited the debate about the local manufacture of vaccines and its critical link to public health. There are now multiple initiatives to build more resilient health systems and establish a global capability in vaccine supply. The possibility of future pandemics, and the need to avoid a repetition of the economic disintegration which has taken place over the last 18 months, has opened an urgent dialogue about intellectual property, technology transfer and technological capability. South Africa’s participation in the SARS-CoV-2 vaccine value chain could have been more significant, were it not for the slow implementation of a public-private partnership, established in 2003 to modernize the country’s vaccine capability. Using a framework informed by the theories of innovation systems and industrial policy, this seminar will cover the background to the partnership, its achievements, its failings and its lack of preparedness for COVID-19. The presentation will also outline present technologies for the manufacture of vaccines, including the mRNA- and adenovirus-based products, and how the new approaches could change the sector. In the final section, these developments and the lessons from the historical analysis will be extended to suggest ways in which the partnership could be more strategically managed, and South Africa’s response to future pandemics considerably strengthened. Further details at: https://www.up.ac.za/graduate-school-of-technology-management/news/post_2995685-public-seminar-held-on-23-june-vaccine-manufacture-in-south-africa-policy-failures-of-the-past-can-inform-our-options-for-a-better-future-prof-david-walwyn
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Graduate School of Technology Management
Vaccine Manufacture in South Africa:
Policy Failures of the Past Should Inform
Our Options for a Healthier Future
Professor David Walwyn
Vaccine Roll-Out and Health Security
2
Ledford, H. 2021. Six months of COVID vaccines: what 1.7 billion doses
have taught scientists. Nature, 594 (June), pp 164-167.
Vaccine Distribution by Income Group
3
High and Upper Middle Income received 84% of
vaccines (end-May) and are the most vaccinated
Vaccination and Manufacturing
4
Extent of Local Vaccine
Manufacturing
No Manufacturing
Per Capita
Income
Low Income
High Income
Full Value Chain
United Kingdom
(64%)
Canada
(67%)
South Africa
(0.8%)
China
(40%)
What am I Going to Cover?
Basics/basis of vaccination
different types of vaccines
mRNA as a novel technology
Basics of industrial policy
policy changes in South Africa since 1990
Biovac Public-Private Partnership (PPP)
objectives and agreements
achievements and failures
policy alternatives
Lessons for industrial policy w.r.t vaccine
manufacture
5
What Will You Find Useful and
Interesting?
How do you make a mRNA vaccine?
How could a results-oriented industrial policy be
structured?
How was the vaccine public/private partnership
(PPP) conceptualized and what happened?
why could it not produce a SARS-CoV-2 vaccine?
6
Part 1: Vaccines
7
Basics/Basis of Vaccination
Exposure to an immunogenic substance, which
induces an immune system response,
either directly (whole cell or protein subunit vaccine) or
indirectly (adenovirus or mRNA vaccine)
What is the difference between an antigen and an
immunogen?
an antigen binds to an antibody
Why does that offer protection?
the exposure ‘primes’ the immune system (race against
time)
correlates of protection and SARS-CoV-2
8
Different Types of Vaccines
Whole cell
Live/Attenuated (measles)
Inactivated/Killed (polio)
Protein fraction (of organism)
Subunit vaccine, uses single antigen (pertussis)
Conjugate, uses two different antigens (pneumococcal)
Inactivated toxin
Diptheria (polypeptide chain) and Tetanus (enzyme)
Carrier vaccines
Adenovirus (Ebola, Zika)
mRNA (SARS-CoV-2)
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Some of the Vaccines that We Use in
South Africa
Hexaxim; hexavalent vaccine consisting of
inactivated virus: poliomyelitis
inactivated toxoid: diphtheria and tetanus
subunit: acellular pertussis (2-component) and hepatitis B
surface antigen
conjugate: Haemophilus influenzae Type B polysaccharide
with tetanus protein
Prevnar 13 (multivalent pneumococcal)
Rotarix (rotavirus)
Measles
BCG (tuberculosis)
10
SARS-CoV-2 and Vaccines
All the types represented (efficacy in brackets)!
11
Type
Manufacturers
mRNA
Pfizer /
BioNTech (95%)
Moderna
(94%)
GSK /
CureVac (47%)
Adenovirus
AstraZeneca / Oxford (63%)
Jansen / Johnson & Johnson (67%)
Sputnik (92%)
Inactivated Virus
Sinopharm
/ Sinovac (67%)
Protein Subunit
Novovax
(86%)
The Vaccine Value Chain
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1Adjuvants, nucleosides, glucose,
vials, caps, solutions, etc.
Primary Raw Materials1
Active Ingredient
Distribution
Formulation
Addition of adjuvant
and other materials
Whole cell, virus,
protein, mRNA, etc
2
1 3 4
Filling
Labelling &
Packaging
Vials and syringes
mRNA as the New ‘Kid on the Block’
13
Fermentation
(Plasmid DNA)
Bioreaction &
Purification
Formation of Lipid
NanoParticles
Filling, Packaging &
Distribution
Vials and other
containers
RNA Polymerase
Nucleotides
5’ Capping
DNase (digests DNA)
Ultrafiltration
Ion Exchange/Chromatography
Lipids and Ethanol
CureVac’s mRNA “Printer”
14
How Much mRNA to Vaccinate the
World? (8 billion people)
Two doses per person
80% coverage
5% manufacturing failure rate
Pfizer/BioNTech @ 30 μg per dose
= 404 kg mRNA
Cost of manufacture about $12 per dose
15
Kis, Z., Kontoravdi, C., Shattock, R. & Shah, N. 2021.
Resources, Production Scales and Time Required for
Producing RNA Vaccines for the Global Pandemic Demand.
Vaccines, 9(3), pp 1 - 14.
Part 2: Industrial Policy
16
Industrial Policy
Industrial Policy; what is it?
a strategic intervention by the state to support the
economic development of the manufacturing sector
South Africa; how has its policy evolved?
17
Neo-Liberal Triumphalism & Formation
of the World Trade Organisation
The late 1990s and early 2000s was the heyday of
tariff reform and neoliberal policy
From Davies (2019):
the promise of Doha that there would be a rebalancing of
the global trading system to the benefit of developing
countries resulted only in amplifying the privilege of the
rich and powerful.
18
Davies, R. 2019. The politics of trade in the era of
hyperglobalisation: a southern African perspective.
Geneva: South Centre.
Average Industrial Tariff:
1991 to 2016
The Consequences … ?
Employment in the textile, clothing, leather and
footwear sectors fell from 198,000 in 1994 to 88,000
in 2017
Over the same period, manufacturing has declined
from 1.46 million to 1.19 million jobs and 21% to
13% of GDP
20
Maia, J. 2019. South Africa’s experience in industrial
development. Pan-African Parliamentary Committee on
Transport, Industry, Energy, Communication, Science and
Technology. Sandton: Industrial Development Corporation.
Health (Trade) vs Industrial Policy
Trade policy was dominant, especially in health
procure as cheap as possible without consideration of the
consequences for employment and industrial development
Prices dropped by 40% between 2003 and 2016
Wouters, O. J., Sandberg, D. M., Pillay, A. & Kanavos, P. G. 2019. The
impact of pharmaceutical tendering on prices and market concentration in
South Africa over a 14-year period. Social Science and Medicine, 220, pp
362-370. doi: 10.1016/j.socscimed.2018.11.029
Closure of 37 pharmaceutical plants between 1995 and 2005
Horner, R. 2021. Global value chains, import orientation, and the state:
South Africa’s pharmaceutical industry. Journal of International Business
Policy, pp 1-20.
21
Demand and Supply Side
Supply Side
All the input costs (production of goods)
Demand Side
All the pull factors (consumption of goods)
Demand Side
(Revenue)
Supply Side
(Costs) Firm
s
Policy Instruments
Demand-Side
Tariff Protection
Preferential Procurement
Local Content Requirement
Supply-Side
Training Schemes
R&D Allowance
Capital Allowances
Marketing and Export
Assistance
Logistics Subsidies
Tax Holidays
Firm
s
×
Monetary Policy?
Graduate School of Technology Management 24
Policy Mix and Industrial Policy
‘Policy mix’ is a powerful analytical framework to understand
issues of variable policy impact in national systems of
innovation
Walwyn, D. R. & Naidoo, S. 2020. Policy mixes and
overcoming challenges to innovation in developing countries:
Insights from a mixed methods study of South Africa’s
manufacturing sector. African Journal of Science, Technology,
Innovation and Development, 12(1), pp 33-46.
Graduate School of Technology Management
Results of this Study: South Africa
25
Graduate School of Technology Management
Comparison with Other Countries
26
Part 3: Biovac and Vaccine
Manufacture
27
Some Historical Context (Industry)
Polio vaccine manufacturing established in the
1950s
discontinued in the 1960s
State Vaccine Institute
rabies and Bacillus CalmetteGuérin (BCG)
Rabies was never approved; BCG stopped in 2000
South African Vaccine Producers
DTP
Under development; never licensed
Background to the PPP (State Vaccine
Institute)
29
Background on Public Private Partnerships
(PPPs)
Mutuality
Separate
Competencies
PPP Identity
Low
Sharing
High
Sharing of
Control
Identical
Ideal PPP
The Biovac Institute PPP
New entity with majority shareholding by a private
company
Biovac Consortium (52.5%)
Department of Science and Innovation (35%)
Technology Innovation Agency (12.5%)
Used a classical demand-side instrument (public
procurement) to support various supply-side
measures including:
R&D portfolio
Human resource development
Capital investment for local manufacturing
Technology transfer
By 2010, The New Biovac
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Vaccine Value Chain at Biovac
33
Packaging
Filling
API Production Formulation
Structure of the Contracts
Supply Agreement
Biovac supplied all the required vaccines (EPI)
Department of Health paid a premium of between 10% and
13% for this procurement and supply
Shareholders Agreement
Subscription Agreement (shareholding)
Strategic Equity Partner Undertakings
SEP Undertakings
Category
Objective
Vaccine Production
(Capacity)
Ensure a domestic capacity in vaccine production which will enable
the South African health authorities to respond to disease outbreak
emergencies
Vaccine Production
(Quality)
Establish an economically viable vaccine producer applying the
principles of current good manufacturing practice (cGMP)
Vaccine Production
(Skills)
Develop and retain local vaccine production related skills and ensure
the continued development of biotechnology and related skills
Research and
Development
Establish a strong research and development (R&D) capability focused
on the development of locally relevant vaccines
Markets (Exports)
Create a competitive platform from which a domestic producer of
human vaccines and related medical biotechnology products can
compete with other markets
Black Economic
Empowerment (BEE)
Promote BEE and the identification of a BEE partner to participate
through a shareholding in the PPP
CAPEX and Premium
So What Went Well?
We have a vaccine capability/facility, which has grown in
real terms
Although slow to implement SEP 1, it is now filling &
finishing vaccine vials for the EPI
Qualitative Comments
“…the vaccine was distributed on a budget, on time
and under appropriate conditions, which hasn’t
been happening before 2003. Vaccine distribution
before the PPP was not reliably sustainable.”
Operational lines for Pfizer’s Prevnar and Sanofi
Pasteur’s Hexaxim
Walwyn, D. and T. Nkolele. 2018. An Evaluation of South
Africa’s Vaccine Public-Private Partnership; 2010 to 2014.
Health Research Policy and Systems, 16(1), pp 30.
Meeting the SEP Undertakings ..
Category
Component
Comment Done?
Vaccine Production
(Capacity, Quality
and Skills)
Packaging and labelling
Significant proportion of
imported products
repackaged
Formulation and filling
Hexaxim
and Prevnar
Manufacture of
immunogen
Not attempted
R&D
Antigen development
Conjugate vaccine
developed and licensed
Markets (Exports)
Compete in other
markets
Exports to SADC
Black Economic
Empowerment
(BEE)
Transfer of Department
of Health Shareholding
Transferred to Department
of Science and Innovation
And SARS-CoV-2?
No immunogen capability and hence unable to
respond
40
What Went Badly?
The problems …
Unable to raise investment capital (issues of ownership, dilutions
and governance)
Vaccines were/are a small market with tightly controlled know-
how (bigger now)
Limited potential for exports due to WHO/GAVI procurement from
MNCs/originators
Initial 5 year period too short with uncertain renewal
The nature of PPPs … Government requirement of significant
transfer of risk to the private sector AND value for money/cheaper
to government
Part 4: Lessons for Policy
42
What Can We Learn?
South Africa’s policy mix is dominated by supply-side
measures which provide limited assistance for new
firms struggling to gain market share and established
firms based on outdated operational models
Consistent and long-term demand-side incentives are
essential (offtake)
PPPs are difficult structures due to lack of capacity
and trust
it may have been better to establish a 100% privately
owned entity with designated industry status
Aspen vs Biovac vs CSL
44
Lessons Part 2
Low cost finance is important due to capital intensity
derisking the sector is vital (supply or demand side)
In developing countries, it is not possible to have
health resilience and low prices, with the exception
of large population countries
need 100 million doses per year for sustainability
In vaccines, access to technology and entry to
international markets are difficult
needs a strategy and takes time
never give up on regional markets
45
Abbott, F. M., Abbott, R., Fortunak, J., Gehl Sampath, P. & Walwyn, D. 2021.
Opportunities, Constraints and Critical Supports for Achieving Sustainable
Local Pharmaceutical Manufacturing in Africa. Nova Worldwide.
Acknowledgements
The Biovac team
Dr Morena Mokoena, Patrick Tippoo, Selwyn Kahanowitz,
Martin Kahanowitz
The PPP team
William Dachs, Dirk Els, Gerrit Muller
University of Pretoria
Tsakani Nkolele
Shahendra Naidoo
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End
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An Evaluation of South Africa's Vaccine Public-Private Partnership
  • D Walwyn
  • T Nkolele
Walwyn, D. and T. Nkolele. 2018. An Evaluation of South Africa's Vaccine Public-Private Partnership; 2010 to 2014. Health Research Policy and Systems, 16(1), pp 30.